Amazon’s Whole Foods Purchase is Nothing New

Retail has never been easy and let’s face it, eCommerce was the biggest change in a century and it has left many traditional retailers reeling. With Amazon (and Warby Parker and many others) opening retail stores in major centers and now with Amazon’s purchase of Whole Foods many analysts are saying the sky is falling. It isn’t. They have simply forgotten their history.

Back in 1886 a guy named Richard Sears started a mail order business selling watches. Just watches. By 1888 he had expanded his offerings and begun to print catalogs taking advantage of the growing transportation superhighway of railroad tracks that were criss crossing the nation. Using bulk purchasing and distributed warehouses he was able to cut out the middlemen and sell products for substantially less than traditional retailers. Does this all sound familiar? But wait! It gets better!

Sears grew incredibly fast and had challenges along the way. They invested in technology that revolutionized warehousing with a time scheduling system that increased plant capacity by a factor of 10. They were so successful that Henry Ford visited their warehouse to learn about their production line system.

By the 1920’s the growth of department store chains and improved distribution had started to cut into Sear’s growth. In 1925 they opened a catalog centre in Chicago and by the end of 1927 they had 27 retail stores. By 1933 they had 400.

Along the way Sears led with innovation and expanded through diversification and acquisition. They launched their own brand of tools and an insurance company. They bought a real estate company and launched a credit card. Almost every step that Amazon takes today has been done before. Amazon is this centuries Sears Roebuck and just like Sears it will have to continue to adapt to stay ahead of its competitors. It is a retail company, a technology company, a warehouse company, and a logistics company but it is not unstoppable.

Amazon knows that there are limits to the growth of eCommerce and that the vast majority of products and groceries are and will continue to be purchased on the main streets and malls of our cities no matter where the shopping starts. Traditional retailers are miles ahead of Amazon when it comes to convenience and instant gratification. Where smaller players are weak is with the adoption of solid omnichannel strategies and technology that allow shoppers to browse online, find out what stores the products are at, and choose the most convenient way to shop and receive their goods. Larger retailers have already woken up and are investing heavily to stay relevant while the mid-market and independent retailers consider their options or dabble with low cost and simple solutions. As they say, “You don’t bring a knife to a gunfight” and retailers need to invest in the proper weapons today so they can survive and thrive tomorrow.